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Circle buys Poloniex to expand cryptocurrency services

Circle has acquired cryptocurrency exchange operator Poloniex, as the Boston-based start-up gets more aggressive in its bid to become one of the key providers of enabling technologies for virtual currencies, reports Xconomy (FinTech Futures’ sister publication).

The deal is for approximately $400 million, according to Fortune, which cited an anonymous source.

Five-year-old Circle previously raised at least $136 million in venture capital from investors such as Goldman Sachs, China-based Baidu and IDG Capital Partners, Breyer Capital, and General Catalyst Partners.

Despite wild price swings and global regulatory uncertainty, cryptocurrency investments are on the rise – and that means growing demand for services like digital currency exchanges. The acquisition of Poloniex could put pressure on its competitors, including Coinbase and Kraken – both based in San Francisco – and Seattle-based Bittrex.

The deal also signals Circle’s growing ambitions to provide the technology underpinning a variety of transactions. The company’s products and services include a mobile app that individuals can use to send and receive fiat currency; an “over-the-counter” cryptocurrency trading desk for large “institutional” buyers and sellers; and a forthcoming mobile app that will enable individuals to invest in cryptocurrencies.

Now, Circle brings Poloniex into the fold. Founded in 2014, the US-based start-up operates a global exchange for Bitcoin, Ethereum, and other cryptocurrencies. Its service is available in more than 100 countries, according to Circle.

Poloniex’s team will join Circle. A Circle spokeswoman declined to share with Xconomy how many employees Poloniex has or where they’re located. Circle said it will initially focus on bolstering Poloniex’s customer service, technical operations, and risk and compliance efforts. Over the long term, Circle said it plans to expand the number of markets served by Poloniex and the number of virtual currencies listed on its exchange, as well as branch out into other assets.

“We envision a robust multi-sided distributed marketplace that can host tokens which represent everything of value: physical goods; fundraising and equity; real estate; creative productions such as works of art, music, and literature; service leases and time-based rentals; credit; futures; and more,” Circle co-founders Sean Neville and Jeremy Allaire wrote in a blog post.

“We believe that the contractual rules around exchange for anything and everything will become increasingly represented in distributed global software, rely on inconvertible distributed shared memory in the form of distributed ledgers, and benefit from the services of global multidimensional marketplaces such as Circle Poloniex.”

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